179 Australia-Japan Trade Negotiations: Informal Discussions

6th December, 1956

CANBERRA

The Australian draft on Assurances [2] was handed over.

MR PHILLIPS in reply to a question by Mr Ushiba confirmed that we would not require this type of assurance in the agreement but would be satisfied with a nonpublic assurance. While it would have 'sales' value to Australia to publish such an assurance we would be prepared to keep the matter confidential if this would make easier for Japan.

MR USHIBA said that there was a limit to the Government-Exporter relations in Japan. The type of Government to Government consultations envisaged in the paper would be practicable from Japan's point of view.

MR PHILLIPS said that the advantages of consultation would be:

1. it would acquaint the Japanese with the problems which arose from time to time.

2. it would provide information on which the Japanese could base and direct their action in Japan.

MR USHIBA explained that the Japanese Government could only take action of the kind envisaged if an organisation existed which the Government could approach. These organisations were private bodies and government action was limited to encouraging and approving steps taken by the associations. The difficulty is that for smaller industries there may be no Association. Even where an Association exists there are always some exporters who do not belong to it.

Effective limitation of exports would require the co-operation of Australian importers who should only deal with reputable exporters and members of Associations.

The initiative in forming Associations lies with Japanese industry and as interest in the Australian market grows, so the number and strength of Associations will grow. The present level of licensing in Australia should allow time for firmer commercial arrangements to be consolidated, backed up by both Governments.

MR PHILLIPS suggested that consultation between the two Governments would allow developments to be watched closely. Even under present licensing conditions individual items could be troublesome. He suggested that it should be possible for the Japanese Government to take the initiative in encouraging restraint in Japan although he realised there might be difficulties in the implementation of such measures.

MR USHIBA agreed that the Japanese Government could encourage the restraint by exporters. However, para 14 of the Australian draft is a little too firm. [3] In Canada the situation was somewhat different as only textiles were concerned and export Associations were strong. In Australia's case there were many minor industries involved. He repeated his suggestion that Australian importers would need to co-operate by trading only with reputable Japanese firms. This would make Japan's task much easier. He inquired whether para 6 of the Australian draft meant that quality and price were the main problems in connection with damage from Japanese competition.

MR ROBERTSON explained that our intention was to point out the matters which might require watching. We did not wish to suggest a particular figure as a 'danger point' but rather to leave it to the Japanese.

MR USHIBA said that Mr McEwen had mentioned that Japanese Exports to Australia might increase (to or by) 20m. to 30m. as a result of m.f.n. treatment. Could the Japanese take this as an indication of a 'danger point'.

MR ROBERTSON explained that it would depend on how the increase was spread. He instanced B category interchangeability as illustrating the dangers of an overall figure.

MR USHIBA said that quality could be reasonably controlled by Government inspection except where Australian importers dealt with 'fringe' exporters. Price was apparently a very important factor yet Japan could not sell higher to Australia than to other markets without running the risk of being accused of dumping elsewhere.

Mr Ushiba went on to point out that while the Japanese could understand the protection of Australian industry, it would be very difficult to explain the need to protect UK.

MR ROBERTSON said that our main interest was domestic industry but that tariff preferences were after all exchanged with Commonwealth countries and any damage to preferences will react against Australia.

MR USHIBA said that the Japanese delegation recognised the preference point vide Article XIX but it was very difficult to explain this concept to the satisfaction of the Japanese exporters etc. In this draft the reference was reasonable but he suggested it would be wise to restrict references to protecting third party interests and to confine statements to 'national interest' or similar general phrase.

With reference to the application of special duties Mr Ushiba said he understood that the Australian delegation view was that if these duties were levied on all countries, because of Japanese exports, Australia would be contravening G.A.T.T.

MR ROBERTSON confirmed that this was the Australian view.

1 Held in the Department of Trade. Present were Ushiba, Takashima, Kawanami and Nishimiya, Phillips, Robertson and Lind.

2 'Assurances regarding the Export of Japanese goods to Australia' dealt with the problem of assessing the extent to which vulnerable Australian industries and British Commonwealth preferences might be affected by relaxation of restrictions against Japanese trade.

It suggested 'voluntary action on the part of the Japanese government and its export interests to ensure constant watchfulness on Japanese exports in such matters as quantity, quality and price', concentration on high quality goods, and consultation between the two governments, but reserved Australia's right to take emergency action against Japanese goods 'where no other course would be practicable'. A copy of the draft is in NLA : CRAWFORD PAPERS MS4514/9/34, AUSTRALIAN-JAPAN TRADE AGREEMENT.

3 Paragraph 14 read: 'It is the understanding of the Australian Delegation that the Japanese Delegation accepts the views of the Australian Delegation as expressed above and that the Government of Japan will take such action with its exporters as may be necessary to prevent serious damage to Australian industries or severe disruption to the pattern of Australia's imports.'

[NLA : CRAWFORD PAPERS MS4514/9/33, JAPAN-AUSTRALIA TRADE NEGOTIATIONS 1956/57, pt i]